Top 10 Tips for Buying an Investment Property | Part 1



Whether you’re on the cusp of purchasing your very first investment property or are buying into your tenth or eleventh asset, the process can naturally be a little daunting. Markets shift so fast, and as with most investments, there can be a fair amount of confusion and risk involved – especially if this is your secondary income. Here we share ten top tips to guide you as you purchase your investment property.

 

1) The right property at the right price

This is key – and although it sounds simple, acquiring the ‘right property’ (see criteria below) at the right price can be tricky. First, you need to determine what you need, then think about the value of the property – to you as an investor and in the long-term should you decide to eventually sell. Mitigating factors such as essential repairs and refurbishment, location and any planned regeneration locally will influence the value. Guidance from a specialist in this area is key to avoid overpaying for the right property – or choosing one that doesn’t suit your needs and is unlikely to yield sufficient rental income.

 

2) Location, location, location

On the surface, this is a no-brainer – but there’s much more to location selection than meets the eye. There isn’t just one type of ‘good location’ – the location all depends on the type of property, the type of tenants you’re looking to attract and the future prospects of the area as a whole. For example, if you’re looking to acquire a large student flat, you’ll want nightlife and shops next door. If you’re investing in a larger family home coffee shops, green spaces and good schools nearby will form a ‘perfect location’.

Choosing the CBD or best possible suburb is undeniably a smart move – but be sure to delve a little deeper to identify smaller areas or streets within them that are prime for investment purposes. Consider zoning, too – if development is permitted you could find yourself with a huge block of flats built next door that significantly affects the future value of your property.

 

3) Lock in the lifestyle

The lifestyle offered by a property and its surrounding location is key –  as we naturally want to live somewhere that makes us feel happy and fulfilled. Look for key drivers including a great shopping strip, trendy cafes, bars and restaurants, good schools and green spaces. When people feel connected to the culture of an environment they will pay more to be close to it. Safety is key too – a beautiful apartment in a dodgy part of town isn’t likely to be attractive to young professionals who want to be able to head out without feeling worried about crime.

 

4) Focus on what you can’t change

You can always add value to a property through renovation and refurbishment – but it’s important to focus on the fundamental, underlying attributes that cannot be changed. Take into account important aspects such as street location, positioning, noise and lack of garden space. It’s worth assessing floor plans side by side too – as a good layout will appeal both to renters and to buyers should you decide to sell in the future.

 

5) Scarcity and demand are key

The methodology behind scarcity and demand is simple: if there are a lot of people looking for a particular type of property in a certain area but there is a shortage of those properties available, you’re in for a win. Experts drive home the message that investment properties should always have an element of scarcity, ensuring that they will always be in demand. This protects you from situations involving negative equity, long-term vacancy and other issues that can significantly damage your profitability in the future.

 

This blog is split into two parts – to read the second instalment please click here.

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